QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: We have operations both within the United States and Canada, and we are exposed to market risks in the ordinary course of our business.
+Added: We have operations within the United States, Canada and Australia, and we are exposed to market risks in the ordinary course of our business.
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and interest rates.
2 unchanged sentences
Interest Rate Risk
−Removed: Our cash and cash equivalents as of June 30, 2021 were held primarily in checking, money market, and savings accounts.
−Removed: As of June 30, 2021, we had $1.2 billion of cash equivalents invested in money market funds.
+Added: Our cash and cash equivalents and certain of our restricted cash as of June 30, 2022 were held primarily in checking, money market, and savings accounts.
+Added: As of June 30, 2022, we had $162.5 million of cash equivalents invested in money market funds, certificates of deposit, corporate bonds, and other commercial paper with maturities less than three months.
Our cash and cash equivalents are held for working capital purposes.
−Removed: The fair value of our cash and cash equivalents would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of a majority of these instruments.
−Removed: Any future borrowings incurred under our credit facilities would accrue interest at a floating rate based on a formula tied to certain market rates at the time of incurrence.
−Removed: Interest rates may adversely impact our customers’ spending levels and ability and willingness to pay outstanding amounts owed to us.
−Removed: Higher interest rates often lead to higher payment obligations by customers of our credit products to us, or to lenders under mortgage, credit card, and other consumer and merchant loans, which may reduce our customers’ ability to remain current on their obligations to us.
+Added: The fair value of our cash and cash equivalents and certain restricted cash would not be significantly affected by a change in interest rates due to their short-term nature.
+Added: Our securities available for sale at fair value as of June 30, 2022 included $1,595.4 million of marketable debt securities with maturities greater than three months.
+Added: A rise in interest rates would have an adverse impact on the fair market value of our fixed rate securities while floating rate securities would produce less income than expected if interest rates were to decrease.
+Added: Because our investment policy is to invest in conservative, liquid investments and because our business strategy does not rely on generating material returns from our investment portfolio, we do not expect our market risk exposure on marketable debt securities to be material.
+Added: Continued volatility in interest rates and potentially inflation, which may persist longer than previously expected, may adversely impact our customers’ spending levels and ability and willingness to pay outstanding amounts owed to us.
+Added: Higher interest rates may lead to higher payment obligations on our future credit products, or to their lenders under mortgage, credit card, and other loans.
Therefore, higher interest rates may lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our operating results.
+Added: We rely on a variety of funding sources with varying degrees of interest rate sensitivities.
Certain of our funding arrangements bear a variable interest rate.
−Removed: Given the fixed interest rates charged on the loans that we purchase from our originating bank partners, a rising variable interest rate would reduce our interest margin earned in these funding arrangements.
−Removed: Dramatic increases in interest rates may make these forms of funding nonviable.
+Added: Given the fixed interest rates charged on the loans that we purchase from our originating bank partners or originate ourselves, a rising variable interest rate would reduce our interest margin earned in these funding arrangements.
Additionally, certain of our loan sale agreements are repriced on a recurring basis using a mechanism tied to interest rates as well as loan performance.
+Added: Increases in interest rates could reduce our loan sale economics.
+Added: We also rely on securitization transactions, with notes typically bearing a fixed coupon.
+Added: Increases in interest rates may result in higher coupons using refinancing.
We maintain an interest rate hedging program which eliminates some, but not all, of the interest rate risk.
−Removed: As of June 30, 2021, a hypothetical 10% relative change in interest rates would not have a material impact on our consolidated financial statements.
−Removed: T able of C ontents
+Added: Factoring in this program, as of June 30, 2022, we estimate that a hypothetical instantaneous 100 basis point upward parallel shock to interest rates would have a less than $30.0 million adverse impact on our annual financial results over the next 12 months.
+Added: Table o f Contents
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.